Posted on 09/23/2008 8:49:22 AM PDT by johncocktoasten
Senators Isakson/Chambliss,
I am writing to express my hope that you will oppose ANY federal bailout of wall street, including government purchase of private mortgage loans and asset backed securities.
The implementation of this plan would result in the immediate insolvency of numerous banks and financial institutions across the country as the marking to market of these assets would create a massive hole in the capital base of these banks.
Under the alternative of not bailing out these institutions, many will still fold. However, allowing them to fold on their own will allow PRIVATE industry to come in and buy the liquidated assets at a real market price. Additionally, FDIC will be able to re-work loans for borrowers that these banks have failed to resolve.
Bolstering the FDIC insurance fund, as well as backing up the money market funds is the way to handle this problem. As far as the derivatives investors, they are responsible for knowing the risks of trading in illiquid securities with no actual commodity or instrument supporting them. It just like an option trade, the option written is only as good as the entity that writes the option.
I am in the mortgage industry, and can report to you that home prices are beginning to stabilize. This bailout will jeopardize the beginning of this recovery as moral hazard, with forced writedowns on mortgages and bankruptcy judges re writing loans, will erode any financial incentive for private industry to lend where the government will not.
If the credit default swaps market and the commodity market are properly regulated, and participants in those markets are required to have a stake in those markets, there would be a stabilizing effect. This stability would come thru in food and energy prices and consumers could begin to re-align their budgets to reflect the new economic reality.
YES- Bolster FDIC Insurance Fund YES- Bolster Money Market Funds YES- Require commodity and derivative market participants to have open interests in those markets
NO- Federal Purchase of Bad Assets NO- Federal Ownership stakes in Corporations NO- Allowing Judges to Rewrite Private Contracts (mortgages) NO- Do Not Hand Over this kind of power to the next chief executive of the United States
pgkdan is WRONG and the bill is posted just above this response.
I'm not crazy about this idea...and I'm the farthest thing from a financial expert. But if we don't create TARP, what's the alternative? Are you willing to stand back and watch the American banking industry crumble?
I understand your yelling, and you are absolutely right. The New Deal was a reaction to the Depression, where the government had to go in and rescue (ie socialize) over little detail. Instead of just dealing with the liquidity problem that triggered the Depression, they had to deal with every aspect of the country the Depression effected. We need to be cautious because libs move in most with crisis’s(sic) that could be caused by inaction.
We think the bailout is bad.. wait until the dems try to deal with the aftermath if it is allowed to crash.
1. Nationalize anything at will and print unlimited $ to do so causing the $ to collapse (sec 2a and 2b3)
"National anything"?
The draft only authorizes purchase, not nationalization (seizure). Moreover, it only authorizes purchase of "mortgage-related assets" not "anything."
The author cannot read, apparently.
2. Form it’s own internal takeover police / security force to enforce takeovers (sec 2b1)
It says nothing of the kind, especially nothing about forcing takeovers.
3. Ride roughshod over existing legal contracts (sec 2b2) making any private contract worthless (just like a dictatorship)
It says nothing of the kind. What it does say is that the new agency is allowed to enter into any mortgage contract, regardless of restrictions on public contracts that would otherwise prevent the agency from becoming a party.
The author is just making stuff up out of whole cloth and assuming we're too stupid to read.
4. Invent unlimited future laws (sec 2b5)
No, it says that the agency will be able to come up with its own "regulations" not laws. Just like every other existing government agency.
5. Seize, control, micro-manage & dictate the price of mortgages and therefore houses (ie, become a command / planned economy) (sec 5a-c)
Completely false. It says that the agency can make markets in the mortgage assets that it purchases from mortgage sellers.
There's nothing about asset seizure here at all.
6. Cream billions out of it for personal expenses (sec 7)
No, it discusses administrative expenses (i.e. paying employees) not personal expenses.
7. Dictatorially declare himself to be above the law – unaccountable to anyone no matter what he does (sec 8)
No, it basically says that if you want the agency to buy your mortgage then you hand over all the terms of the mortgage to the agency and you don't get to sue the agency if you change your mind about the sale.
8. Declare that in a practical sense, the “meat” of the above rules will never end (sec 9)
More lies. Clearly the emaning of the proposed language is that the agency, afetr two years, will lose its authorization to purchase mortgages, but will still be allowed to administer the mortgages it does own beyond that period.
9. Slap the entire cost on the national debt meaning everyone will end up paying more under the next government due to drastically higher national debt interest payments (and therefore taxes) (sec 10)
(1) It raises the debt ceiling. Which Congress routinely does.
(2) The increased interest payments on the national debt is offset by the cashflows from the mortgages. The average mortgage yields upwards of 7%. The US' cost of debt is less than 2.4%.
If you borrow 700 million of debt at 2.4% and use it to buy assets that yield more than 2.4%, you are profiting.
yes, but who gets punished when the banks go belly up? Who gets punished when the economy collapses into a global depression?
Apparently you can't tell a one-page draft from a bill.
Is a table of contents a book?
Is a menu a meal?
Although I confess... it is a complex issue so the connection between the customers and the federal money may not seem all that direct to most people, especially after it's been distorted for days by the Media (who don't understand it at all).
We see a PERP WALK down Wall Street. We limit salaries, and tie bonuses to shareholder profits. What the hell do you call it when they rake in billions in BONUSES when shares are going down?
Yeah, we might need to do a bailout, but right now, we're given Paulson unlimited power, an open checkbook, with no accountability.
Furthermore, he says they might not "cooperate" if we limit their compensation packages? WELL, JUST HOW DAMN SERIOUS IS THIS CRISIS? We're being had. This is the biggest power grab in this nation's history.
HELLOOOOO, FASCISM!
Did you view the videos ?
My prayers are with him. As the nature of the beast becomes clearer I think more patriotic Americans are going to have to carefully consider if we continue to encourage our kids to join our military. Why? As you so aptly put it, what are you defending? The right of super connected Wall Street insiders and Fed Bankers to make themselves rich at your expense for two generations? The right of 51% of the electorate to put socialist creeps like Pelosi, Reid and Obama in power? The right to have the Supreme Court controlled by hard-leftists rule from the bench and make a joke of the design of the Republic? The right to be able to use a constantly inflating currency that doesn't hold its value?
I realize these are very hard thoughts, but I think they will begin to be asked more and more in the coming years.
“Did you fraudulently imply to us that you were familair with the details of a pieceof legislation that hasn’t even been written?”
The previous comment, #24 which was posted after this was written gives the link for the DRAFT proposal for the legislation. On the hill they are still very busy knocking heads and trading and maneuvering as to what the final language will be. Now is YOUR chance to have some input.
To contact your congress critter, call 202-CA4-3121, ask the operator for your Congressperson/Senator’s office. If you don’t know this, tell the operator where you live and you will be given that information. When you call, have something specific and useful to say, as they are currently inundated with angry callers.
I see. So the Social Security Administration isn't fascist and isn't scary, even though it wields vastly more power and absorbs four times the money involved in this bailout every single year.
Interesting argument, but ultimately a laughably indefensible one.
I don’t have time to get into the particulars, but - for starters - when you can make up your own “regulations” without oversight and without FUTURE accountability, you can pretty much do any damn thing you want.
Congress email addresses ping
I see. So, more succinctly, there is no bill to read.
Just a page of possible Cliff Notes for a bill that is as yet unwritten.
Agreed!!!
NO TO THE BAILOUT!!!
Them gargoyles down on the street are sitting there handing out bonuses to themselves that amount to MORE MONEY THAN TEN HONEST AMERICANS MIGHT EARN IN A LIFETIME, COMBINED!!
WRETCHED EXCESS!!!
The tipping point to tyranny...
That's not a BILL. It's a proposal. It may serve as the skeleton of the bill that will be drafted but it is not a bill.
I'll grant you that the President and Sec. Paulsen want this proposal adopted pretty much as is but I doubt that Congress can bring themselves to do that. We can discuss the contents of the Bill after it's written.
LOL! Not so busy that you scream your head off like Chicken Little, but far too busy to actually look into what you're screaming about.
I understand.
but - for starters - when you can make up your own “regulations” without oversight and without FUTURE accountability, you can pretty much do any damn thing you want.
Every government agency does this routinely and they have done so for at least 75 years.
Why is it suddenly "fascism" on September 23, 2008 of all days?
What happened, as if by magic, in the last 24 hours?
If you borrow 700 million of debt at 2.4% and use it to buy assets that yield more than 2.4%, you are profiting
/////////////////
Why stop there, why not buy 1.4 trillion dollars of debt, or 2.1 or 2.8. There are plenty of other good opportunities out there right?
And who is profiting. None of that profit will make it back into my wallet.
KILL THE BAILOUT. It is a big lie. The Dems want Socialism.
Its a lie. We lost 36 percent from 2000/02
We lost 21 percent from 2007/08
There is now sky falling. If it falls to 8300, we will still be better off than in even 2003.
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